Collection systems are used by a large number of businesses worldwide. In a typical scenario, a business will receive notice from the collection system that a customer's account is unpaid or overdue. The business then calls the consumer requesting payment of the unpaid balance. Typically the consumer is requested to send payment via mail. After this call the process starts over again and will check for payment at a specified time in the future. If payment is not made within a reasonable time the service may be shut off or the company may attempt to repossess the product.
Unfortunately, current collection practices are impractical for bad debt (for example, returned ACH items) of less than $50. Furthermore, if the goods or services purchased are immediately fulfilled and consumed, the lack of timely return information in the ACH system combined with the cost associated with current business practices for collections make collecting on the debt impractical. Yet an originator or ODFI (originating depository financial institution) suffers a material loss if the volume of low value transactions is significant. A merchant or individual may suffer a loss based upon an ACH item that is returned, because of a customer's bounced check, because of a person-to-person payment that cannot be settled, or any of a variety of other reasons. Unfortunately, current collection practices are not suitable for these low-value debts, and a merchant or individual suffers from the loss of a delivered product or service for a debt of any value. As mentioned above, whether the collection is instituted using an in-house process or by a collection agency, often the labor costs involved are greater than the amount of the debt.
A system and method are desired that would make practical the collection of these low-value debts and that would assist the merchant or individual in recouping any delivered products or services.